CME Clearing accepts short-term UST ETFs as collateral
02 August 2022 US
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CME Clearing has widened its collateral eligibility to accept short-term US treasury ETFs as initial margin.
By extending the range of collateral that it will receive as IM, the clearing house aims to extend the flexibility of funding solutions offered to market participants with IM requirements. CME Clearing claims that it accepts the widest range of collateral of any major clearing entity.
These short-term exchange-traded funds invest in US treasuries with less than 12 months to maturity. CME Clearing managing director and global head of clearing and post-trade services Suzanne Sprague indicates that the clearing house has worked closely with ETF sponsors to ensure that accepting short-term UST ETFs as collateral meets with its risk management standards, while offering a broader choice of collateral that users can post to the CCP.
Goldman Sachs Asset Management global head of ETFs Mike Crinieri says: “Treasury ETFs such as the Goldman Sachs Treasury 0-1 Year ETF are a useful form of collateral that may benefit clients that have challenges managing the roll of US Treasury Bill portfolio, or who simply wish to outsource treasury management. We are [working] with CME Clearing to deliver the operational efficiency of the ETF wrapper for collateral purposes.”
Carolyn Weinburg, BlackRock’s global head of product for ETF and index investments, says: “iShares launched the first four-bond ETF 20 years ago, believing they would modernise fixed income markets by increasing transparency and liquidity while unlocking sophisticated portfolio and trading capabilities for our clients.
“Margin and collateral are a new use case for bond ETFs like SGOV and SHV, which further demonstrates how they are useful, resilient investment tools that can improve outcomes for individuals and large institutions alike.”
By extending the range of collateral that it will receive as IM, the clearing house aims to extend the flexibility of funding solutions offered to market participants with IM requirements. CME Clearing claims that it accepts the widest range of collateral of any major clearing entity.
These short-term exchange-traded funds invest in US treasuries with less than 12 months to maturity. CME Clearing managing director and global head of clearing and post-trade services Suzanne Sprague indicates that the clearing house has worked closely with ETF sponsors to ensure that accepting short-term UST ETFs as collateral meets with its risk management standards, while offering a broader choice of collateral that users can post to the CCP.
Goldman Sachs Asset Management global head of ETFs Mike Crinieri says: “Treasury ETFs such as the Goldman Sachs Treasury 0-1 Year ETF are a useful form of collateral that may benefit clients that have challenges managing the roll of US Treasury Bill portfolio, or who simply wish to outsource treasury management. We are [working] with CME Clearing to deliver the operational efficiency of the ETF wrapper for collateral purposes.”
Carolyn Weinburg, BlackRock’s global head of product for ETF and index investments, says: “iShares launched the first four-bond ETF 20 years ago, believing they would modernise fixed income markets by increasing transparency and liquidity while unlocking sophisticated portfolio and trading capabilities for our clients.
“Margin and collateral are a new use case for bond ETFs like SGOV and SHV, which further demonstrates how they are useful, resilient investment tools that can improve outcomes for individuals and large institutions alike.”
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